Ulta Beauty (NASDAQ:ULTA) stock performs better than its underlying earnings growth over last three years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Ulta Beauty, Inc. (NASDAQ:ULTA) share price has flown 136% in the last three years. How nice for those who held the stock! It's also up 13% in about a month.

The past week has proven to be lucrative for Ulta Beauty investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Ulta Beauty

SWOT Analysis for Ulta Beauty

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During three years of share price growth, Ulta Beauty achieved compound earnings per share growth of 49% per year. This EPS growth is higher than the 33% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Ulta Beauty has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Ulta Beauty stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Ulta Beauty shareholders have received a total shareholder return of 25% over one year. That's better than the annualised return of 14% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Ulta Beauty that you should be aware of before investing here.

Of course Ulta Beauty may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.